The Annual Equivalent Rate (AER) is a percentage figure used to help you compare savings accounts and is based on the assumption that you keep your savings in the same account for 12 months. The AER is designed to give you a more accurate picture when comparing interest rates side-by-side.

It is used as an alternative to the Gross rate, which is basically a flat annual interest rate.

Unlike the gross rate, the AER rate factors in the interest you earn each month i.e. the compound interest. This is because if your savings account earns monthly interest, then the following month you will earn interest on your savings plus the interest that was previously accrued. If your savings account only pays interest annually, then the AER and Gross rate should effectively be the same.

Both the AER and Gross rates show the interest earned before any possible tax deductions.

What savings account features should I look for?

Another major factor to consider when comparing savings accounts is how you get access to your money and manage your account.

Many banks and building societies offer multiple ways of managing your account including:

Online Banking via the bank’s own website

Mobile Banking including access via the provider’s own app

Telephone Banking using a pin code

Branch Services – in person at a local branch of the bank

However, some accounts may restrict some of these methods such as only allowing you to withdraw over the telephone or in person at a bank branch.

How do I access my savings?

Most accounts will generally have the flexibility of allowing you to access and withdraw your savings at any time. However, some accounts, particularly fixed interest ones that pay higher rates, may only allow you limited access a couple of times a year or may penalise you for withdrawing your money.

You should also be aware of having to give notice on withdrawing your money. Although most savings accounts don’t have this rule, some higher interest paying ones or fixed interest accounts may require you to let them know some time beforehand e.g. 30 days, 60 days etc., that you intend to withdraw your money.

What is the minimum opening deposit?

Whilst the majority of savings accounts can be opened with a deposit as little as £1, some may require higher amounts.

For example, some regular savings accounts where you need to save a minimum amount each month, usually require you to deposit that minimum amount when opening the account.

Fixed term savings accounts that often pay higher interest rates, will also require you to deposit a minimum deposit higher than £1.

What does exclusive to members mean?

Some savings account options will require you to have a normal current account with that bank or building society provider. In return you may get a higher interest rate on your savings, an additional bonus rate or some premium features.

By having a current account with the same provider as your savings account, you can easily transfer between the two.